The Need for having funds available
Sound financial management is essential to businesses because the need for operating funds never seems to cease. Also, like our personal financial needs, the capital needs of a business change over time. For example, as a small business growth, its financial requirements shift considerably. (Remember the example of Parsley Patch.) The same is true with large corporations such as AT&T and PepsiCo. As they venture into new product areas or markets, their capital needs grow and intensify. It's safe to say that different firms are in need of available funds for a variety of reasons. However, in virtually all organizations, funds must be available to finance specific operational needs. Let's take a look at the financial needs that affect the operations of both the smallest and the largest of business enterprises.
Financing Daily Operations
If workers are scheduled to be paid on Friday, they don't expect to have to wait until Monday for their paychecks. If tax payments are due on the 15th of the month, the government anticipates the money will be there on time. If the interest payment on a business loan is due on the 30th, the lender doesn't mean the 1st of the next month. As you can see, funds have to be available to meet the daily operational costs of the business. The challenge of sound financial management is to see that funds are available to meet these daily cash expenditures without compromising the investment potential of the firm's money.
As you may or may not know, money has a time value. In other words, someone offered to give you $200 today or $200 one year from today, you would benefit by taking the $200 today. Why? A very simple reason. You could start collecting interest on the $200 you receive today and over the course of a year's time, your money would grow. In business, the interest gained on the firm's investments is important in maximizing the profit the firm will gain. For this reason, financial managers often try to keep cash expenditures at a minimum free funds for investment in interest-bearing accounts.
The finance managers maximize the investment potential of the firm's funds. As you might expect, efficient cash management particularly important to small firms in conducting their daily operations.
1. Find Russian equivalents for the following words:
Management, essential, cease, change, venture, enterprise, payment, paycheck, anticipate, cash, expenditures, potential, benefit, receive, reason, course, important, bill, collection, procedure, discount, account, maximizing, gain, potential, expect, daily, efficient.
Match the following word combinations.
financial management |
финансовые потребности |
financial requirements |
простая причина |
simple reason |
трата наличных |
cash expenditure |
финансовое управление |
3. Complete the sentences.
1) Financial management is essential to businesses because…2) If tax payments are due on the 15th of the month…3) The challenge of sound financial management is to see that…4) Financial managers often try to keep cash expenditures at a minimum free funds…
4. Give the Definitions.
Cash Management, tax payments.
5. Make up sentences with the following word combinations.
Personal financial needs, financial requirements, business loan, investment potential, investment potential, efficient cash management, small firms.
6. Put special questions to the text.
7. Retell the text.
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